Excel Cost Management Accounting in Business
In today’s competitive business environment, cost management is a crucial part of any growth strategy. To not only reduce expenses but also gain a significant competitive advantage, companies need to implement effective cost management practices. In this article, Buffcom.net shares an Excel accounting file for cost management in businesses.
1. Determining Costs in Business
Total costs in a business include direct labor costs, direct material costs, and overhead costs.
1.1. Direct labor costs
This includes wages and related expenses paid to direct labor workers, which can be fully allocated based on the amount of time used to produce a unit of product or to provide a specific service.
1.2. Direct material costs include:
- Raw material purchase price;
- Inventory costs;
- Ordering costs;
- Losses due to shortage of inventory.
1.3. Overhead costs include:
- General production costs;
- Sales costs;
- Business management costs.
Costs can be determined as:
- Variable costs: The sum of these changes in proportion to the level of production;
- Fixed costs: These costs do not change as the level of production changes.
2. Cost Control in Business
2.1. Establish cost standards.
First, the business needs to establish cost standards, specifically the standards for each expense based on specific standards for each individual case based on an analysis of the company’s operations. Therefore, the business needs to study previous data, make a standard comparison, and base it on the price trend in the market and the company’s development strategy.
2.2. Determine actual costs.
The next step is to collect information about actual costs. This work is not only the responsibility of the accounting department but also the participation of other departments to make the business more proactive in processing cost information.
- Excel accounting file for cost management
- The cost management accounting system includes:
- Monthly cost report for the year
- Average cost report per store
- Cost report by cost ratio
- Cost report by expense category
- Top cost statistics by month, by year
Effective cost management is essential for the success of any business. By properly identifying and controlling costs, companies can make informed decisions, increase efficiency, and improve profitability. The Excel accounting file shared in this article can help businesses streamline their cost management process and make data-driven decisions for sustainable growth. We hope this article has been helpful, and wish you success in your cost management endeavors.